Every quarter, many money managers have to disclose what they've bought and sold via "13F" filings. Their latest moves can shine a bright light on smart stock picks.
Today let's look at Barrow, Hanley, Mewhinney & Strauss, one of the biggest value-focused institutional investment companies around. According to the folks at GuruFocus.com, over the 15 years ending in 2011, Barrow, Hanley racked up a cumulative gain of 178%, compared with just 124% for the S&P 500.
The company aims to invest through portfolios that maintain below-average price-to-earnings ratios, below-average price-to-book ratios, and above-market-average dividend yields. It also tends to focus on large-cap companies.
The company's reportable stock portfolio totaled $48.1 billion in value as of June 30, 2012. Its top three holdings, representing a total of almost 10% of the portfolio, were Philip Morris International, American Express, and Pfizer.
So what does Barrow Hanley's latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include Phillips 66 (NYSE: PSX ) , the recently spun-off downstream business of ConocoPhillips. It's the nation's largest independent oil refiner, and its stock recently hit a 52-week high, getting a boost from falling oil prices that swell its profit margins. It also initiated a dividend, recently yielding about 2%.
Among holdings in which Barrow Hanley increased its stake were New York Community Bancorp (NYSE: NYB ) and Seadrill (NYSE: SDRL ) . New York Community Bancorp does have an appealing 7.7% dividend yield and seemingly low valuation, but the company isn't expected to grow very rapidly. Deepwater rig specialist Seadrill also sports a hefty dividend, recently above 8%. Bulls like its strong performance (it recently received a multi-billion commitment from a major oil company), but some worry about its significant debt load and the possibility of a glut of deepwater rigs depressing prices eventually. Falling prices for oil can also decrease enthusiasm for offshore drilling.
Barrow Hanley reduced its stake in a handful of companies, including semiconductor fabrication equipment supplier Applied Materials (Nasdaq: AMAT ) . Bulls like its dividend above 3%, which it has been increasing regularly. The company is also planning to buy back billions of dollars of its own shares, boosting the value of remaining shares. Bears worry that the chip industry isn't yet in a strong rebound phase, pointing to companies such as Intel lowering their outlook for the rest of the year. Even Applied Materials lowered its outlook.
Finally, Barrow Hanley unloaded several companies, such as R.R. Donnelly (Nasdaq: RRD ) , which provides labels, packaging, and more to the private and public sector. Its fan base has been shrinking recently, with credit-rater Fitch downgrading its outlook for the debt-heavy company to negative and investors worrying that the dividend may be unsustainable. The company recently reported a rise in earnings, but a 3% decline in revenue.
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing, and 13-F forms can be great places to find intriguing candidates for our portfolios.
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